Speaker 1: Welcome to Chopping It Up. I'm your host, Michael Halen,
Speaker 1: Senior restaurant and food service analyst at Bloomberg Intelligence. This
Speaker 1: episode is also going to be published by my guests
Speaker 1: on their extremely informative and entertaining restaurant podcast, Hospitality Hangout.
Speaker 1: So some of you probably already know from that intro
Speaker 1: who I'm about to introduce. It's the founders and managing
Speaker 1: partners of Branded Hospitality Ventures, Jimmy Frishling aka the Finance
Speaker 1: Guy and Michael Shaftsburgh aka Shatzy aka the restaurant Guy.
Speaker 1: I get yeah. They're restaurant tours, venture capitalists specializing in
Speaker 1: restaurant tech, newsletter writers, podcast hosts, Real reniss sons men.
Speaker 1: So thanks for doing this, guys. Pleasure, pleasure being here
Speaker 1: on the podcast with it Chopping it Up, Loving it.
Speaker 1: I gotta tell you, I feel smarter just being on
Speaker 1: Bloomberg Intelligence show, like because I'm going back to my hood.
Speaker 1: I used to I used to be addicted to the
Speaker 1: Bloomberg terminal. I don't big Oh yeah, big customer, right, Jimmy,
Speaker 1: they owned you, They owned you. I was a customer
Speaker 1: for decades. Love love to still miss my Bloomberg terminal. Yeah. Well, listen,
Speaker 1: we've been trying to do something together for a long time,
Speaker 1: so this is this is exciting. Man, I'm pummed. Well,
Speaker 1: I'm a big I'm a big I read the Bloomberg
Speaker 1: News on my feet on Apple every morning. I get
Speaker 1: all my news. It's the place to golug nice like
Speaker 1: that plug out. So thanks thanks to both of you
Speaker 1: for doing this special. Thanks to you, Shatsy. I've listened
Speaker 1: to your pot enough to know that you don't like
Speaker 1: being outnumbered by finance guys. No, this is not good.
Speaker 1: I not good for me to have two finance guys
Speaker 1: and just Shatsy. That's that's not good. I'm gonna have
Speaker 1: to make it. Bring in resources. But I brought in books.
Speaker 1: I had books in my office that I brought in
Speaker 1: just I was reading last night. So I think I'm
Speaker 1: up for the challenge. Moses, you had to actually read
Speaker 1: the book. Oh no, No, I just brought the books
Speaker 1: into your office. Jim didn't read it because I called
Speaker 1: him up in here. That doesn't work. Well, listen, if
Speaker 1: it makes you feel any better, Jimmy's you know, outnumbered
Speaker 1: by a couple of jerseys. True, that's nut. Jimmy doesn't
Speaker 1: like Jersey. Don't get dogs, don't give me, don't get
Speaker 1: me started my Jersey brothers and sisters. He doesn't know.
Speaker 1: He doesn't really like it. Undist. You know there was
Speaker 1: a tunnel, us bridge and tunnel guys man Um, All right, well,
Speaker 1: let's let's get started with the brand adventures origin story shotsy.
Speaker 1: I think you were reminding your own business running some
Speaker 1: restaurants when Jimmy came to with an idea, right, yeah, Well,
Speaker 1: you know, we've had restaurants for as you alluded to,
Speaker 1: quite a few years, over twenty five years. Jimmy has
Speaker 1: been a friend of We've been friends for longer than
Speaker 1: over thirty years through mutual friends. Another one of our partners,
Speaker 1: Dean Palin and uh so. On the restaurant side, Jimmy
Speaker 1: has always been an investor of ours in our restaurants,
Speaker 1: so he's always been our restaurant partner. And I would
Speaker 1: say the extent was Jimmy had a lot of parties
Speaker 1: and events there. He drank a lot, he ate a lot,
Speaker 1: and spent a lot of time. So that was really
Speaker 1: Jimmy's most of Jimmy. He really didn't have much to
Speaker 1: do with the restaurants outside of He enjoyed it, he
Speaker 1: used it, spent all he spent a lot of money
Speaker 1: there and he paid uh, you know, so it was great.
Speaker 1: It's so it was great having to him as a
Speaker 1: customer and all that. And yeah, and and and as
Speaker 1: time went on, you know, on the restaurant side, I
Speaker 1: mean we were always very using a lot of tech
Speaker 1: and innovation on the restaurant side as a customer. And
Speaker 1: that was the extent of of of our ore, you know,
Speaker 1: getting into involved in technology and innovation. We were at customers.
Speaker 1: It was when we were renovating a restaurant Dukes on
Speaker 1: the Upper East Side that we started looking at technology
Speaker 1: to do self pooring beverage, and it was it was
Speaker 1: just it was really cool, and we're renovating this restaurant.
Speaker 1: We figured, you know, if we're gonna put all this
Speaker 1: time and money into it, we should come up with
Speaker 1: something new and innovative. And I remember talking to Dean
Speaker 1: and Jimmy like we're gonna put into self pouring and
Speaker 1: Jimmy's like, oh, that's really cool. It's awesome. And that
Speaker 1: was the extent. It was really cool and awesome, and
Speaker 1: we put this self pouring beverage system and pour my
Speaker 1: beer and we got that going. It was really cool.
Speaker 1: We were selling a lot more beer, we were saving money,
Speaker 1: there was no lost customers. We were really loving it.
Speaker 1: And to be honest, I became friendly with the founder
Speaker 1: and CEO, Josh Goodman and uh and and I just
Speaker 1: was thinking, I'm like, are you looking for investors? This
Speaker 1: seems really cool? And he's like, I am, I am,
Speaker 1: and I have a convertible note. I had no idea
Speaker 1: what a convertible note meant. Of course I pretended I did.
Speaker 1: I'm like, oh, yeah, we do that all the time.
Speaker 1: Quickly called Jimmy. I'm like, Jimmy, you know, Jimmy loved
Speaker 1: the self boring paverage. This is is. I told me there
Speaker 1: was an investment opportunity. It's a convertible note. And that
Speaker 1: was really how it got started. And then Jimmy kind
Speaker 1: of took over with his finance cap and you know,
Speaker 1: met Josh and that's kind of like, really how it's
Speaker 1: spotted it the real skinny. That was our first investment.
Speaker 1: And Jimmy, I still don't know what a convertible note is.
Speaker 1: Jimmy has still hasn't told me, but that's how we started,
Speaker 1: you know, Mike going, I think chats person of all
Speaker 1: that's accurate and the truth always sounds better. What I
Speaker 1: would say is, through working with Chatsy and our restaurant operators,
Speaker 1: what I discovered when I besides putting somebody to work,
Speaker 1: and the Chatty accuses me of eating and drinking too
Speaker 1: much or for free I paid up front, then I
Speaker 1: just kept eating and drinking. But but what Chatsy kind
Speaker 1: of brought brought awareness to me of was that it
Speaker 1: was all this technology being created for the industry, but
Speaker 1: that a lot of operators and the users of the
Speaker 1: tech were being less consulted. And I argue that this
Speaker 1: industry is the most misunderstood because everyone applies their guest
Speaker 1: experience to what they think is actually going on at
Speaker 1: these venues, and they therefore have a false sense of familiarity.
Speaker 1: And I'm not blaming the guests. In fact, we as
Speaker 1: restaurant owners would even call them customers. We call them guests.
Speaker 1: We want the relationship, We want them to feel comfortable.
Speaker 1: But what we observed, and I said to Chatsy, you're
Speaker 1: an SME, he said, what's that? As a subject matter expert?
Speaker 1: He said, what's that. I said, you are an operator,
Speaker 1: you're using this tech. The technologist should be speaking to
Speaker 1: you about the product market fit. And I've never seen
Speaker 1: an asset class that was, in my opinion, maybe not
Speaker 1: leveraging the available talent and experts that are that were available,
Speaker 1: and that's what we tried to harness. So after making
Speaker 1: a few investments as as more of a hobby, we
Speaker 1: formalized Brandon and here we are, you know, almost five
Speaker 1: years later. As an remember I mean our first I
Speaker 1: don't know, our first half a dozen investments. I think, Jimmy,
Speaker 1: we're really done just through Jimmy, myself and our partner Dean.
Speaker 1: Jimmy was still doing his whatever he was, Yeah, he
Speaker 1: had a whole other business going on, and Dean was
Speaker 1: in real estate, and I was still running the restaurants.
Speaker 1: So we were just you know, so it really and
Speaker 1: then it just took off. And I think that's what
Speaker 1: really makes you guys unique, being subject matter experts, being
Speaker 1: actually able to test some of these things in your
Speaker 1: restaurants is very unique in the industry, and it's pretty cool. Uh, Jimmy,
Speaker 1: can you talk a bit about your Core four that's
Speaker 1: your nickname for the ecosystem that that you guys have
Speaker 1: helped create, because I think that's another thing that really
Speaker 1: sets branded apart. Yeah, and thank you. I A. I
Speaker 1: love the core four because it rhymes. It's always fun
Speaker 1: for me, a simple man that core files terrible what
Speaker 1: we came up without three? It was originally the core
Speaker 1: file drop Yeah, But now in all seriousness, the core
Speaker 1: four is our ecosystem. It is the community that we
Speaker 1: take very seriously. And I have to say, as a
Speaker 1: recovering Wall streeter um, the community that is in and
Speaker 1: around food service and hospitality is really quite a wonderful community.
Speaker 1: And if you've worked in the industry, you understand the camaraderie,
Speaker 1: the team work, the rolling eperence when he's getting your
Speaker 1: hands dirty. But the Core four is first and foremost
Speaker 1: the partner companies, the portfolio companies we invest in, and
Speaker 1: that's forty five of them, and they are a key
Speaker 1: part and the companies we're soliciting and seeking to bring
Speaker 1: on as our partner companies. These are the folks that
Speaker 1: are creating and developing the tech and innovation that is
Speaker 1: operator centric. Our number one rule of investing is the
Speaker 1: technology has to be an ally and good for the operator.
Speaker 1: We're a B to B investor. We want to embolden
Speaker 1: operators to leverage tech to maximize margin optimization and bring efficiencies.
Speaker 1: We do not want to work with tech that goes
Speaker 1: through the operators and to the guests because inevitably, we
Speaker 1: think it creates friction and competition of who is the
Speaker 1: guest loyal to. So as long standing operators, we've chosen
Speaker 1: to be on the side of other restaurateurs and focus
Speaker 1: on them, and that dovetails into the second vertical or
Speaker 1: the second you know a member of our core four,
Speaker 1: which is a hospitality network. Those are just that the
Speaker 1: owners and operators of venues that sell and serve F
Speaker 1: and B. So while it's dominated by restaurants, it includes
Speaker 1: hotels and airports and stadiums and arenas and beer gardens
Speaker 1: anywhere F and be sold and served. That's the network,
Speaker 1: and we invite the network to join us on this
Speaker 1: journey of identifying and vetting and validating tech and innovation.
Speaker 1: The syndic is probably the most self explanatory. Other investors
Speaker 1: and strategic connections are those that have a not just
Speaker 1: a desire to see this industry survive, but actually want
Speaker 1: to see it thrive. These are the folks and very
Speaker 1: large firms that sell into this industry. Ecolab, the leading
Speaker 1: kitchen start, the leading food safety firm in the market
Speaker 1: over three hundred thousand restaurants, Middle Being the leading kitchen manufacturer,
Speaker 1: Coke and Pepsi. Pepsi wants to sell a lot of food,
Speaker 1: a lot of snacks, and a lot of averages. They
Speaker 1: want this industry to fraud and we found that this
Speaker 1: combination allows us to accelerate our young companies. The network,
Speaker 1: the syndicate and the connections. The joke on us says,
Speaker 1: we don't charge any of these folks, um and how
Speaker 1: do we make money? Volume but a bump. But no,
Speaker 1: in all seriousness, we invest in early stage companies and
Speaker 1: we leverage this network, the syndicate and the strategic connections
Speaker 1: to really advance these companies that are in line with
Speaker 1: our vision to improve margins and efficiencies for this industry.
Speaker 1: We love. So that was a longer explanation, Mike than
Speaker 1: you wanted. The chats is like, wow, he did that
Speaker 1: short of than expected. No, that was it. That was
Speaker 1: about right. That was solid solid. That was the core four.
Speaker 1: Could you imagine it was the core eight? I mean
Speaker 1: it would be the stays. That's why I actually that's
Speaker 1: what initially was the core. Right now, I said, you know,
Speaker 1: I can't go on these calls anymore, Jimmy unless we
Speaker 1: chop we got were the four things core four because
Speaker 1: we got fifteen minutest down. But which it's important and
Speaker 1: it's it's uh, it's super smart and uh and I
Speaker 1: love it. Um. So we got a lot to talk
Speaker 1: about today. I want to talk a lot about the
Speaker 1: companies that you're invested in. You know, this is the primary, uh,
Speaker 1: you know, reason for for me inviting you guys was
Speaker 1: to really dig into some of the companies that that
Speaker 1: you're investing. But but there's an eight hundred pound gorilla
Speaker 1: in the room, and uh that's Silicon Valley Bank. So
Speaker 1: before we get into all the good stuff, I feel
Speaker 1: like no one ever really heard of sb SVB except
Speaker 1: for you know, except for startups and some venture formally,
Speaker 1: anyone ever heard of this. It's like Chase Bank of America, Well,
Speaker 1: what the hell is that? Well, I don't know that
Speaker 1: many you know, millionaires and billionaires, and so that's why
Speaker 1: I've never heard of Silicon bat right, Like that's the
Speaker 1: only people they uh they banked for so yeah. In
Speaker 1: the venture in the venture world, in the early stage starts,
Speaker 1: everyone knows SVB. But I mean, like I was out
Speaker 1: for dinner last night with some friends. I mean outside
Speaker 1: of the news, they had no they had it had
Speaker 1: no effect on their life. They could care lesson nothing.
Speaker 1: They're in different industries, no effects in Massachusetts. Try to
Speaker 1: find went to the SPB branch that he could find
Speaker 1: in Massachusetts and found that it wasn't affiliated. It wasn't
Speaker 1: There was no trip, it was no banking branch there,
Speaker 1: there was no SBB branch, and yet he had he
Speaker 1: had yes private wealth, and yet he had money. With
Speaker 1: this movie, He's like, where's the branch, where's the bank? Yeah,
Speaker 1: it's called online back. And I think that's one of
Speaker 1: the things about SPB. It's running because before this all
Speaker 1: went down, no joke, I was talking to somebody about
Speaker 1: how much we loved SVB because set it for the
Speaker 1: account with them was all digital is super easy, you know,
Speaker 1: with thank you America and Chase Whill be nice. Nice.
Speaker 1: We need those guys, No, very nice, nobody. It's old school.
Speaker 1: It's like you want to open account, it's old it's
Speaker 1: you know, wet ink signature on a PDF, backs it
Speaker 1: back to me or email it back to SVB. It's
Speaker 1: all digital. It's they you don't speak to anybody, so
Speaker 1: it's just injury. So it's a very it's a very
Speaker 1: hip way of doing business. Or it was a very
Speaker 1: hit for sure. So you know, things are changing quickly. Jimmy,
Speaker 1: you did a great job in the newsletter addressing the topic.
Speaker 1: You know, what, if any, are the lasting implications of
Speaker 1: the bank's failure on the tech industry. Yeah, it means
Speaker 1: a little bit of PTSD. I have to admit on
Speaker 1: Thursday afternoon when the news was coming across the wires,
Speaker 1: it was actually a great week last week. There was
Speaker 1: a lot of very good work for branded and securing
Speaker 1: capital for ourselves and some of our companies. And I
Speaker 1: was having a nice week and then got the news
Speaker 1: n SVB and it reminded me a lot of fat
Speaker 1: rewind fifteen years ago or so with the Great Recession.
Speaker 1: First of all, my expectation and not that this is
Speaker 1: a perfect solution, but I do think the Fed, the Treasury,
Speaker 1: and the FDSC got it right. And the question was
Speaker 1: the speed of which they had to announce that all
Speaker 1: depositors were. In fact, I'm going to be checked it
Speaker 1: and essentially guaranteed. I noted when I was coming to
Speaker 1: work on Monday morning, how somewhat peaceful it was walking
Speaker 1: from the subway age of the office, and I was thinking,
Speaker 1: had they not done this, what would today have looked like?
Speaker 1: Because I think we would have had a meaningful bank run,
Speaker 1: you know, I think one of the things that's changed.
Speaker 1: And we're still dissecting all of this, but I do
Speaker 1: think social media, and it's not a blame of social media,
Speaker 1: but when we've dealt with the Great Recession and in
Speaker 1: previous crisises or in previous spats of great volatility, we
Speaker 1: have not had the fluidity and the speed of which
Speaker 1: things can go viral, the speed of which a Peter
Speaker 1: Teal could send out a notice or send out a
Speaker 1: message and through Twitter and social media and otherwise it
Speaker 1: goes viral. And for if you're a holder of an
Speaker 1: account at a SBB or another meaningful regional, the ease
Speaker 1: of which you go online to move money and take
Speaker 1: it out or withdraw it is very fluid now. So
Speaker 1: I think it accelerated and exacerbated the crisis. It is
Speaker 1: not a perfect solution to guarantee the depositors. It is
Speaker 1: the right solution, but I will tell you that there
Speaker 1: does issue. Some concerns are on moral hazard. I do
Speaker 1: think there are other banks now some Signature already went under,
Speaker 1: was taken over republics under some pressure. A behemoth like
Speaker 1: Credit Swiss. People have been looking at its balance sheet,
Speaker 1: its financials. The fact is no bank could withstand an
Speaker 1: exodus of the type of monumental proportion of deposits that
Speaker 1: was at risk of happening. So at the end of
Speaker 1: the day, depositors may very well need to be guaranteed.
Speaker 1: But then the question is is how do we almost
Speaker 1: convert this into utility, meaning the banking system, because you
Speaker 1: can't have you know, these ballouts. And let's be clear,
Speaker 1: it's not called a ballout because the taxpayers not on
Speaker 1: the hook. Let me tell you something terrible. Any losses,
Speaker 1: any losses on SVB or Signature are gonna have to
Speaker 1: be paid for, and it might be paid for in
Speaker 1: an assessment on these banks, which may then be paid
Speaker 1: for by an increase in any number of fees that
Speaker 1: are charged to the consumer. So it's never going to
Speaker 1: be free. But I will tell you that I still
Speaker 1: think we're it's always paid for by the taxpayers, so
Speaker 1: one way or another, right Jimmy, Yes, so yes, and
Speaker 1: we're working through it. For branded. Our book of business
Speaker 1: has weathered the storm as well as I ever could
Speaker 1: have asked, and we banked with SVB. We weren't getting
Speaker 1: loans from them, we weren't getting investments from them, we
Speaker 1: weren't borrowing from them. I do think to your question
Speaker 1: Mike on what's going to do to the industry, I
Speaker 1: do think there is a concern that there are a
Speaker 1: number of very large players that were getting a lot
Speaker 1: of their fuel and the oxygen from the likes of
Speaker 1: an SVB or another regional and my concern is that
Speaker 1: that is removed, which it is. No venture death's going
Speaker 1: to come. Venture death gonna be more expensive if it's
Speaker 1: available at all. So I do think there are a
Speaker 1: few levers in the world of finance which are greasing
Speaker 1: and supplying oxygen to the system that are now going
Speaker 1: to be shut off. So I certainly think there was
Speaker 1: a lot of headwinds in our industry. A big correction
Speaker 1: this is going to contribute to that. I'm expecting sixty
Speaker 1: ninety days at least of dissecting what transpired. And it
Speaker 1: may be longer, but I think we're it's contributing to
Speaker 1: a risk off environment, which is obviously a problem for
Speaker 1: many young companies. But I will say a greater tragedy
Speaker 1: was averted the right decision was made to guarantee deposits,
Speaker 1: even though there was no perfect solution. I agree. I
Speaker 1: agree with what you're saying there, Jimbo. One day, the
Speaker 1: weekend was was really just hectic and everyone's scrambling. Were
Speaker 1: these companies. I mean, from our perspective, where our partner
Speaker 1: companies you may make payroll. I mean all they were
Speaker 1: gonna have was two hundred and fifty grand. That's all
Speaker 1: they were gonna have. And that doesn't go very far, no,
Speaker 1: wet Mike. We had to do the work forty five companies.
Speaker 1: Who do they bank with? Who else they bank with?
Speaker 1: Who's with SVB, Who's got liquidity? What are people's runways
Speaker 1: in light of the frozen capital, all the while expecting
Speaker 1: the Fed or Treasury or FDSC to announce the guarantee deposits.
Speaker 1: But you couldn't rely on that. So a lot of
Speaker 1: lines of you know, a lot of liquidity was being
Speaker 1: amassed quietly in case that the right decision wasn't reached.
Speaker 1: So but if you Saturday morning, Saturday morning, they were
Speaker 1: saying they were not garry, they were two fifty. That
Speaker 1: was it. Saturday morning, That's what they were saying. So
Speaker 1: wasn't until really Sunday. So well, Mike pleased to call
Speaker 1: to yelling and said, listen, let's gett Listen to me, listen,
Speaker 1: let's go. We're going. We're going. I got Jimmy and shatsy.
Speaker 1: I'm chopping it up. I got a good I got
Speaker 1: a good story. Tell me what'sppen. Well, it sounds like
Speaker 1: Jimmy's got some work to do now. He's got to
Speaker 1: teach her at forty five companies how to how to
Speaker 1: ladder T short term T bills, Yes, yes, custodial accounts.
Speaker 1: We gotta we gotta work on a lot of places
Speaker 1: to hold liquidity. There are a lot of ways to
Speaker 1: do it today. It was very busy on Monday, all
Speaker 1: the people at Chase and b of A because they
Speaker 1: were setting up new accounts. It's like crazy, yeah, because
Speaker 1: you know, our bankers were going nuts just setting up
Speaker 1: new accounts. Yeah, because those two aren't going anywhere. So
Speaker 1: if you think about the size of deposits, I believe
Speaker 1: the size of the you want to use the core
Speaker 1: for another way, City Bank, JP, Morgan, Bank of America,
Speaker 1: Wells far ago. Since the Great Procession, I think they
Speaker 1: now control almost ninety percent of the deposits of this country.
Speaker 1: They've only increased in size. Too big to fail now
Speaker 1: became too big not to banque like you have to
Speaker 1: bank with them almost, which is going to be really
Speaker 1: I think a challenge in whether or not they should
Speaker 1: be utilities more than than something other than Yeah, if
Speaker 1: you think about SVB, they said it was the thirteenth
Speaker 1: largest by deposit. The spread between the number one and
Speaker 1: two and three and thirteen, it's it's quite quite a
Speaker 1: big spread. You'd think that thirtail's that's pretty big, not
Speaker 1: compared to number one, two and three. Yeah, you'd think
Speaker 1: we'd want to diversify a risk, but apparently that's we've
Speaker 1: gone the opposite ways in the last forty or so years.
Speaker 1: All right, cool, thanks for that. M let's see schatsy,
Speaker 1: how many how many funds we got forty five? Wait?
Speaker 1: How many fun does branded have? You have forty five
Speaker 1: companies that you're invested in. How many funds is branded
Speaker 1: have and you know, out of those forty five companies
Speaker 1: that you've invested in, you know, do you have any
Speaker 1: successful exits that you'd like to bring And that's a
Speaker 1: great question. We had forty five investments. We were fortunate
Speaker 1: to have a couple of exits. So our earliest investments Bbot,
Speaker 1: which was a order and pay with the phone using
Speaker 1: QR codes, which probably doesn't sound that cool and happening
Speaker 1: right now because since the pandemics, QR codes became all
Speaker 1: the rage. QR codes has been around since ninety four.
Speaker 1: I don't think people paid much attention to QR codes.
Speaker 1: I know most people looked at them a little weird.
Speaker 1: They're like, I don't know what that is. I'm certainly
Speaker 1: not gonna use it because I don't need to use
Speaker 1: it and what it is. Pandemic came and boy that changed.
Speaker 1: But so we invested in Bbot. Uh. You know, fortunately
Speaker 1: we saw that kind of trend where your phone was
Speaker 1: a great way to order and pay. Going back to
Speaker 1: um to Dukes one of our restaurants on the Upper
Speaker 1: East Side, as we put in the self pouring beverage
Speaker 1: system on another technology that we kind of brought on
Speaker 1: and and test it out. Was order and pay with
Speaker 1: the phone, a little QR codes on the tables and
Speaker 1: again this was back in like seventeen or eighteen, and
Speaker 1: you could just use your phone scan a QR code
Speaker 1: and you could just order beers, order wings, order burgers
Speaker 1: and pay, put your credit card in and pay. And
Speaker 1: it was really a labor saver. A lot of young
Speaker 1: people went there. And you know, if I asked my
Speaker 1: kid to call up a pizza place and place in
Speaker 1: order for a pizza, my kid would rather starve to
Speaker 1: death then do that. Like if you can't order with
Speaker 1: your phone, like the idea of speaking to a server,
Speaker 1: that was just he preferred not to do that. You know,
Speaker 1: my kids would rather just order a burrito on their phone,
Speaker 1: go grab it, not speak by and eat it and
Speaker 1: you know, and go on Instagram, you know what I mean.
Speaker 1: So it was so at Dukes, which was a very
Speaker 1: young happening place. People love the idea of ordering and pay.
Speaker 1: So Bbot was ordering pay QR codes. Uh. That got
Speaker 1: bought by door Dash. Uh. So we're super excited about that.
Speaker 1: Then another early investment we made, which is go Parrot
Speaker 1: again also uh noticing the trend of of of of
Speaker 1: off premise of people uh liking to stay home and
Speaker 1: and stream Netflix and and Disney Plus and watch on
Speaker 1: their eighty five inch Samsung TV. I mean, it was
Speaker 1: a trend that we've seen for years happening. Um so
Speaker 1: all part of our omni channel vertical that we had
Speaker 1: quite a few investments in, so Go Parrot was white
Speaker 1: label online ordering and really slick user nface, really great
Speaker 1: experience work with a lot of big QSR brands, and
Speaker 1: Square also known as Block bought that to to beef
Speaker 1: up their offering to their restaurants. So so both of
Speaker 1: those companies where our first two exits and really fantastic
Speaker 1: wins for branded and all of the investors so super
Speaker 1: excited about that. So we have two funds and we
Speaker 1: just launched our third fund. Going back to that question,
Speaker 1: and so now we have Branded Hospitality Venture Fund three
Speaker 1: which we are just launching. And Jimmy certainly as the
Speaker 1: finance guy, could speak much more in depth about that,
Speaker 1: but I think just looking at our partner companies and
Speaker 1: what we look at, you know, we spent a lot
Speaker 1: of time breaking down verticals and areas that we felt
Speaker 1: were really important in the restaurant space and as I said,
Speaker 1: omni channel so off premise order and pay with the phone,
Speaker 1: all of all of those things were really important. You know.
Speaker 1: Automation I think is a big buzz today, so certainly
Speaker 1: paying a lot of attention to automation. I think when
Speaker 1: people hear automation, I think they immediately go to robots
Speaker 1: and like the Jetsons and was at Rosie and I
Speaker 1: don't know, I don't We don't look at automation quite
Speaker 1: like that. I mean, robots are an element. I think
Speaker 1: anything that is is because using tech knowledge become more efficient.
Speaker 1: We look at his automation. So I mean we've invested
Speaker 1: in companies that I mean just scanning invoices and ocr
Speaker 1: and and and the ability that that goes right into
Speaker 1: your into your accounts payable or general Edger whatever. I mean,
Speaker 1: that's automation. You know that that a bookkeeper doesn't have
Speaker 1: to type key in everything, so that's that's a form
Speaker 1: of automation. So all those kind of things are things
Speaker 1: that we're looking at. And of course today I think
Speaker 1: customer engagement and loyalty is still very much top of mind.
Speaker 1: It's something that we're still putting a lot of time
Speaker 1: in so so we have three funds and continue to
Speaker 1: look for interesting solutions in the early stage in the
Speaker 1: food service and hospitality space. You got to add some
Speaker 1: more color. I mean, Mike's asking the restaurant guy. He's
Speaker 1: asking me finance questions. I'm passionately sting here. I think
Speaker 1: he was right to ask. It's when I have two
Speaker 1: quick things, I promise I really will be. He was
Speaker 1: right to ask me that question. I think that he won't.
Speaker 1: I think it was well, he was right because he was.
Speaker 1: Let me tell you why, um to get money out
Speaker 1: of Brandon, you need to get two yeses. And to
Speaker 1: be clear, for all your finance people out there, you
Speaker 1: all know, the lead left is the top dog. The experts.
Speaker 1: Shatsy and our team of subject matter experts are operators,
Speaker 1: the people that have been into trenches. Their lead left. Intentionally,
Speaker 1: the finance guy and my investment team we are on
Speaker 1: the rights because we want the experts to tell us
Speaker 1: what's important to them and if they like a company
Speaker 1: from a we would want to use this, we need this.
Speaker 1: Then the investment team does its work. But if the
Speaker 1: operators don't care or it doesn't get them excited. The
Speaker 1: operators aren't going to work on challenger problem or number
Speaker 1: sixteen or sixty eight. It's like top one through five maybe.
Speaker 1: So what we try to do is pick the themes
Speaker 1: that are most pressing to operators, and then if Shatsy
Speaker 1: and the team of experts say yes, we love it,
Speaker 1: then we evaluate it for investments. So I think Mike
Speaker 1: was right to start with you, Shatsy on this question
Speaker 1: because that's how we Ultimately we're looking for stuff that
Speaker 1: makes operators really given us. And the last thing I'll say,
Speaker 1: I'll let you go, shats What all your listeners Mike
Speaker 1: should conclude is our focus group is really shot. Just
Speaker 1: three sons, sha Shat, just three gen z sons basically
Speaker 1: dictate everything we do because my dad might say, why
Speaker 1: are you creating all this tech and ruining my experience?
Speaker 1: I'm my dad. You might have more disposable income than
Speaker 1: Shatsy's three kids, but they're many more consumers the age
Speaker 1: of Shatsy's three kids, So we got to focus on
Speaker 1: what that group wants. Yeah, no, no, I appreciate that.
Speaker 1: I guess. I guess. The thing is I've ever called
Speaker 1: an expert and anything before Jimmy. So, I guess that's
Speaker 1: what through me the subject matter expert. No one's ever
Speaker 1: said that you're an expert. Shats, you're an expert. Thank you,
Speaker 1: most definitely right now, most definitely. Yes, there you go, Mikey. So, Jimmy,
Speaker 1: how much have multiples contracted in the last eighteen months
Speaker 1: and have there been any changes to supply of potential
Speaker 1: deals for you guys? Yeah? If I. By the way,
Speaker 1: something we look at a lot, and I will tell
Speaker 1: you that I think the first order of business than
Speaker 1: any investor or the market for looking at is the
Speaker 1: multiple typically on revenues typically and the arr the annual
Speaker 1: occurring revenues. And I kind of was watching, you know,
Speaker 1: back in two thousand and fourteen, you know, an eight
Speaker 1: nine times multiple on revenues would have been a good number.
Speaker 1: And then I went back a little further before the
Speaker 1: Great Recession, we were at three four x. Then during
Speaker 1: the Great Recession, which is something we're benchmark in particular
Speaker 1: in light of the SVB and the signature and other
Speaker 1: you know, the banking situation during the Great Recession, it
Speaker 1: fell below two x. So there was a risk off environment.
Speaker 1: For those of you who remember that period, then we
Speaker 1: stepped up and had a as the quantitative easing, as stimulus,
Speaker 1: as lending, an easy money let's say, was being poured
Speaker 1: into the system. We watched it go from a below
Speaker 1: two x, as I said, twenty fourteen eight nine, at
Speaker 1: two and eighteen ten x, and then in twenty twenty
Speaker 1: kind of the breakout year of potentially um you know,
Speaker 1: what's what was it? What was greenspans, irrational exuberance. We
Speaker 1: found ourselves in the mid teens one hundred x Jimmy
Speaker 1: the benchmark. Anytime you're talking about multiples, you're at the
Speaker 1: risk of generalizing, and I don't want to do that,
Speaker 1: but from an industry average, and obviously every company needs
Speaker 1: to be looked at and dissected for its own merits.
Speaker 1: But we tapped out at twenty to twenty, you know,
Speaker 1: at around a thirteen to seventeen times multiple. We've come
Speaker 1: cratering down, I would say, even touching a low of
Speaker 1: four x. Right now. We're about at right now, we're
Speaker 1: about a seven times multiple. So we are below where
Speaker 1: we were in two thousand and fourteen, which is a
Speaker 1: number I put forward. We're still well above the pre
Speaker 1: Great Recession numbers. So I think the multiples are healthy.
Speaker 1: What I wouldn't want to say to any of your listeners,
Speaker 1: the multiple on revenues is one indicator. It is just one,
Speaker 1: i'd even say, somewhat easy thing to look at. Then
Speaker 1: you got to dig in. So if you see a
Speaker 1: company that's trading it fifty times multiple or something, I
Speaker 1: just do that number out randomly, you know it. Maybe
Speaker 1: that's obscene, but then you got to dig in and
Speaker 1: find out why. And it was trading into two x multiple,
Speaker 1: maybe that seems perfunctory, but then again find out why.
Speaker 1: So again I think you want to use these multiples
Speaker 1: as indications and maybe a little bit indicative guideline. You
Speaker 1: cannot rely on that solely from an investment perspective. But
Speaker 1: right now we are in around of seven times multiple.
Speaker 1: I think we've bounced off the low. I think the
Speaker 1: SVB and debacle will certainly keep us at steady state,
Speaker 1: if not fluctuating. But I think, you know, Honor about
Speaker 1: the eight nine, which is twenty fourteen, seems to be
Speaker 1: a good number to me. That's great color, you know,
Speaker 1: and it sounds like if things got got worse, they
Speaker 1: would provide some pretty good opportunities for you guys shatsy.
Speaker 1: You know you mentioned digital ordering and QR codes, right,
Speaker 1: they've become ubiquitous. When you're talking about digital ordering, it
Speaker 1: reminded me of this meme that I saw. It was
Speaker 1: like digital ordering, Lets me do my two favorite things,
Speaker 1: sit on the cow to not talk to people. I
Speaker 1: mean we talked. I didn't know he would ask me
Speaker 1: that talk about it. That's what I talked about earlier, right,
Speaker 1: And that's my kids and so and these two things
Speaker 1: have been you know, QR codes and digital ordering have
Speaker 1: been you have become ubiquitous. You know, do you have
Speaker 1: any um companies in your portfolios right now that that
Speaker 1: are really doing a good job of this? Yeah, we do.
Speaker 1: As as I mentioned earlier, it was a It was
Speaker 1: a very big part of our investment thesis. It still
Speaker 1: remains a part of our investment thesis. Uh you know,
Speaker 1: I you know, the world has changed the way we
Speaker 1: do business. I think the way we eat. Uh. You know,
Speaker 1: I like to say optionality. I think, Um, you know,
Speaker 1: Jimmy mentioned his dad. I love his dad. I got
Speaker 1: caught with his dad a week ago Jimmy's birthday. He
Speaker 1: cornered me for about an hour. Give me a war stories.
Speaker 1: Uh but um, you know, he doesn't like using QR
Speaker 1: codes and he doesn't want to order and pay with
Speaker 1: his phone. He's eighty something years old. It's not the
Speaker 1: way he do business, you know. But you know if
Speaker 1: you talk, but you know. So, I think the idea
Speaker 1: of flexibility and choice and optionality is great because you
Speaker 1: know what, there's people that are the young folks out there.
Speaker 1: That's all they know and they want to do that,
Speaker 1: so they should be able to that. So I think
Speaker 1: for the way we look at things at the restaurant
Speaker 1: level and hospitality, I think it is great to have
Speaker 1: the flexibility. You know, if you go to a hotel
Speaker 1: and they allow kiosks to check in, I think it's great.
Speaker 1: I don't think that should be the only way you
Speaker 1: should be able to check in. I think it's great
Speaker 1: to be able to do that. However, for Jimmy's dad
Speaker 1: and the people like that, it's nice if he doesn't
Speaker 1: have to do that. You know, maybe have eight kiosks
Speaker 1: and maybe there's one ambassador who you don't want to
Speaker 1: use the keys, let me help you out. You know.
Speaker 1: I love the digital keys. I'm a big Marriott guy,
Speaker 1: so I love that some hotels you get a digital key.
Speaker 1: You don't even have to do it, you know, to
Speaker 1: see anybody. You literally walk in that door, go right
Speaker 1: to your room, open up that key. In fact, Mmy
Speaker 1: and I were on a conference, I don't know where,
Speaker 1: We're going to Tallas whatever, and we were coming we
Speaker 1: were coming in late and I we landed and we're
Speaker 1: coming in late. We hadn't eaten, and I noticed that
Speaker 1: not only could you check in at this particular hotel
Speaker 1: and it wasn't marry a property, you could check in
Speaker 1: and get your digital key. It said would you like
Speaker 1: to order food to your room? We ordered burgers and
Speaker 1: some beers and fries. And I'm telling you it was
Speaker 1: so seamless, you know. The Uber dropped us off the hotel.
Speaker 1: We went to the room, the key, it worked, It
Speaker 1: opened up the door, knock, knock, knock. About five minutes
Speaker 1: later there was my food. It was beautiful. So I
Speaker 1: think that this kind of tech is really the convenience
Speaker 1: factor is wonderful. It's seamless, it's great, you know. And
Speaker 1: I will tell you another story, very different story. Jimmy
Speaker 1: and are another conference. I think you may have been there, Mike,
Speaker 1: but we were checking in down in Vegas, and they
Speaker 1: had about eight kiosks to check they were all broken.
Speaker 1: None of them work, not one of them worked. I
Speaker 1: don't know if that was on purpose to torture all
Speaker 1: of us going to that conference, because they knew that
Speaker 1: we were like restaurant and finance people. And you went
Speaker 1: in and there were four hundred people online to check in,
Speaker 1: and I knew everybody online. We were all laughing, stand like,
Speaker 1: this is ridiculous that you can't use your phone to
Speaker 1: check in. So I just love I love the automation.
Speaker 1: I love the idea of the QR codes and and
Speaker 1: and and just the digital ordering, etc. But anytime you
Speaker 1: can make things more communing easier for your guest, I
Speaker 1: think it's wonderful. But I do like the idea of optionality, flexibility,
Speaker 1: you know. Uh. And to your point, I think in
Speaker 1: our portfolio we have always put a lot of time
Speaker 1: and energy exploring and finding great companies. One that comes
Speaker 1: to mind right now, go tab As, a company we
Speaker 1: invested in. U does a fantastic job. You know, he
Speaker 1: was solving a problem his um. He had a brew house,
Speaker 1: a brewpub, and and he couldn't find any any solution
Speaker 1: that would work for him to to to make it
Speaker 1: easier for the staff to order. He built it himself.
Speaker 1: This is going back quite a few years. He's been
Speaker 1: around for a while now, and and Tim's a great CEO.
Speaker 1: He's got a great solution. So it's still top of
Speaker 1: mind without a doubt. Fun Boy And yeah, and I
Speaker 1: do like Bondoy for sure. Jimmy, I won't mention that
Speaker 1: hotel in Vegas that and had all those kiosks down,
Speaker 1: but I was there, and I know which hotel you
Speaker 1: know either. Yeah, Jimmy, Inflation and the margin pressure that
Speaker 1: comes with it doesn't seem to be going away as
Speaker 1: quickly as we would like. So can you speak about
Speaker 1: a portfolio company that's helping restaurants save money right now? Yeah? Absolutely,
Speaker 1: I think UM, Look, this is one of the biggest
Speaker 1: headwinds UM and issues that we as an industry are facing.
Speaker 1: Labor certainly ranks very high in the list. UM. I
Speaker 1: think two thirds of our restaurant restaurants in this country
Speaker 1: are really independents and and SMBs UM and they really
Speaker 1: are not afforded the same types of breakpoints and buying
Speaker 1: power that the larger enterprise UM groups are are afforded.
Speaker 1: So I will say that given the focus we are now,
Speaker 1: and there's several different ways to attack you know, inflation
Speaker 1: in the margin pressure. One of them is to address
Speaker 1: procurement and the supply chain. And granted has two companies
Speaker 1: in that space, both Cut and Dry and Simple Simple
Speaker 1: Marketplace and Cut and Dry are very focused on helping
Speaker 1: really actually try party help them, manufacturers, help the distributors,
Speaker 1: help the restaurants. Each company does in a slightly different way,
Speaker 1: but very much focused on group buying and discounts and
Speaker 1: transparency into the process. Recipe management to me, if you
Speaker 1: think about you know, you know, I'm not a golfer,
Speaker 1: but I understand the concept of you know, yes I
Speaker 1: really have. You know, you drive, you drive, you drive
Speaker 1: for show, and you put for dough. If you think
Speaker 1: about putting, that's the back of the house. That is
Speaker 1: your recipe management. That is is your chef and the
Speaker 1: team buying efficiently. And I think, you know, companies like
Speaker 1: Mes and companies like Galley are all about empowering you know,
Speaker 1: the chef, the backup house to order better have greater
Speaker 1: insights than they're really important data and analytics. You know,
Speaker 1: every restaurant operator I deal with tells me about their gut,
Speaker 1: their instinct and their experience. My argument to them is,
Speaker 1: you use data and analytics, watch how much smarter and
Speaker 1: how much better your gut, your instincts, and your experience becomes.
Speaker 1: And we leaned in heavily with investments and ingest aim
Speaker 1: kind of a posh you know, a Verro three point
Speaker 1: zero for those in the industry, and then Brizzo Food
Speaker 1: Metrics is scrubbing publicly available data to again empower operators
Speaker 1: and those selling in the industry just to be so
Speaker 1: much smarter. So they're different ways to battle inflation and
Speaker 1: margin pressure. And those are some of the examples in
Speaker 1: which we leaned to too. Very cool shotsy who's innovating
Speaker 1: with robotics and automation. Yeah, I gotta tell you some
Speaker 1: great companies out there. Again, I think the one that
Speaker 1: everyone talks about, We're not invested, But I think the
Speaker 1: one that everyone always talks about is Meso Robotics and
Speaker 1: Mike Bell and the team over there and what they're doing.
Speaker 1: I think that gives you an idea. It's robotics is
Speaker 1: very very hard, very capital intense of U. I think
Speaker 1: it also it requires some restaurants. Yeah, you just can't
Speaker 1: retrofit your kitchen to throw in the the the flip
Speaker 1: by or the chip be or the you know. So
Speaker 1: it's it's but I mean they're doing great stuff, and
Speaker 1: I think it's it's it's what's happening in the industry.
Speaker 1: And for people to say that it'll never happen, don't
Speaker 1: say that, because it's happening. It's happening. You know, we
Speaker 1: have mostly full serfined dine here in New York City.
Speaker 1: I don't see that happening as quickly, but in the
Speaker 1: quick serve, in mundane tasks that are just repeatable and
Speaker 1: repeatable and repeatable, I think it's happening. I mean, like
Speaker 1: I said, I mean for us poor might be or
Speaker 1: self pooring beverage system. I mean, that's robotics, it's automation.
Speaker 1: It's low it's low hanging fruit. It's you know, when
Speaker 1: you go to a dunkin Donuts or Starbucks and you
Speaker 1: order a coffee and all they do is take a
Speaker 1: cup put ice and then they fill it and you
Speaker 1: wait there. I mean that could all be done by yourself.
Speaker 1: So to me, it's low hanging fruits, so easy for
Speaker 1: some of these restaurant operations to just take that task
Speaker 1: and let the customers do it. Certainly, and if you
Speaker 1: want to have, like I said, if you want to
Speaker 1: have optionality, you can. But like we'd installed the self
Speaker 1: pooring beverage system in our restaurants, it you still could
Speaker 1: order a beer, you could still order a cocktail. You
Speaker 1: didn't have to do this self or if you didn't
Speaker 1: want to, But a lot of people chose to. I
Speaker 1: think the other thing that's really interesting in the automation side, again,
Speaker 1: because it's not just robotics. I think dynamic pricing is
Speaker 1: something that it's been around for a long time. It's
Speaker 1: certainly it's it's a form of automation. You know, those
Speaker 1: prices like we talked about in hotel rooms and airlines,
Speaker 1: they go up and down based and supplying the demand.
Speaker 1: I know, when it's snow and here in a city,
Speaker 1: that uber can cost you a thousand dollars to go uptown,
Speaker 1: maybe two thousand. SHIMMI my right, you're so good. Number good.
Speaker 1: It's a couple of thousand dollars town, you know. And
Speaker 1: if you don't want to take the uber for a
Speaker 1: couple of thousand dollars, you can walk. I mean, what
Speaker 1: can I tell you, But I mean one company that
Speaker 1: we invested in, Juicer, is really taking the online ordering
Speaker 1: kind of menus and saying basically, you know, I don't
Speaker 1: want to say surge pricing, it's just supplying to mend.
Speaker 1: It's it's there's times where you know, the demand is
Speaker 1: very high and and and maybe the pricing can can
Speaker 1: go up and down accordingly. I think so many industries
Speaker 1: we know in the in the travel leisure hospitality space,
Speaker 1: they've already done it. I think every industry car rental, hotels, airlines, um,
Speaker 1: the ride share, they've all done it. So I think
Speaker 1: restaurants is the only industry left kind of that. The
Speaker 1: amusement parks do it, you know, they all do it.
Speaker 1: So so every industry that we know in this in
Speaker 1: this travel leisure in hospitality, uh does it except for restaurants.
Speaker 1: So I think it has to be done right and thoughtful.
Speaker 1: At the end of the day, I think that it's
Speaker 1: coming and I'm seeing a lot of that, and I
Speaker 1: think that's a form of automation where the pricing will
Speaker 1: change based on the blind dement. So we're super excited
Speaker 1: about that. And of course voice is top of mind.
Speaker 1: It's very, very challenging because you know, I don't have
Speaker 1: an accent. You know, I speak beautiful English, right, but
Speaker 1: there are people in the country. I speak swell speak,
Speaker 1: I speak good English, but there are people that that
Speaker 1: that have accents. So think about how complicated a drive
Speaker 1: through is doing voice when you know there's someone like
Speaker 1: me and the the you know, the the automation recognizes
Speaker 1: me immediately, but then there's someone else that's you know,
Speaker 1: from another part of the country has that. It's it's challenging.
Speaker 1: All kidding aside, Uh, you know, we we we've bet
Speaker 1: on on on some some voice like valiant Ai doing
Speaker 1: drive through again. Labor saver, time saver. It's just a
Speaker 1: form of automation, and I think you're going to see
Speaker 1: a lot more of that, and so we're super excited
Speaker 1: about that. I think there's a lot of really great
Speaker 1: opportunity and it's just at the end of the day,
Speaker 1: I think the consumer is going to benefit. The restaurants
Speaker 1: or the hotels are going to benefit by becoming more efficient,
Speaker 1: reducing labor, and I think overall, for the most part,
Speaker 1: a better customer experience. It's not always going to be,
Speaker 1: but as it gets better and better. I mean sometimes
Speaker 1: you call up and you and you try and use
Speaker 1: the automation. It's like, tell me what you want and
Speaker 1: it just doesn't get it, you know. So it's it's hard,
Speaker 1: and it can be challenging and it can be frustrating.
Speaker 1: But think of how far we've come, and I think
Speaker 1: we're getting there. So I think you're going to see
Speaker 1: a lot more of that. Why did you just tell
Speaker 1: me the movie you want to see? Exactly? It could
Speaker 1: be challenging, you know, but yes, Grammar got it right. Um, Yeah,
Speaker 1: there's some cool examples that dynamic pricing is is very
Speaker 1: interesting to me. I mean, strategic pricing, being able to
Speaker 1: price down to the change of prices down to the
Speaker 1: zip code has been been a huge boon to the
Speaker 1: chains that I cover, been able to you know, it's
Speaker 1: enabled them to raise prices more than they probably otherwise
Speaker 1: could have. And it looks like dynamic pricing could be
Speaker 1: another good option. So there's another I just want to
Speaker 1: mention another thing. There's also like another company, Tables, we
Speaker 1: invested in and also founded by we love restaurant We
Speaker 1: love restaurant operators that kind of get involved in solutions
Speaker 1: to help operators because I feel like they kind of
Speaker 1: know the pain point rather than like, you know, a
Speaker 1: tech person that just knows tech. So so Frasier's a
Speaker 1: guy who's been the restaurant business, you know, his whole life,
Speaker 1: and he saw an opportunity with the idea about you know,
Speaker 1: it's really it's really great. Is it's not just making
Speaker 1: a reservation, but what about picking the table you want
Speaker 1: to sit at? What about knowing I don't want to
Speaker 1: sit by the bathroom, I don't want to you know,
Speaker 1: the restaurant. Maybe it's a special occasion. You get to
Speaker 1: see the whole three D immersive layout of the restaurant.
Speaker 1: And again, that whole three D camera has gotten so
Speaker 1: much better over the years. It is a fabulous experience.
Speaker 1: You pick the exact table you want to sit at,
Speaker 1: You book that table, you know, and maybe pay a
Speaker 1: couple of bucks to guarantee that table. So it's a
Speaker 1: great revenue revenue generator for the restaurant, and I think
Speaker 1: for a lot of operators and for guests. I think
Speaker 1: the guests will be like, wow, I could pick the
Speaker 1: table I want, so I don't have to come to
Speaker 1: the restaurant and be like, really, that's the table they
Speaker 1: got for me, And so table's get a lot of
Speaker 1: traction the full serve space, so to another. You know,
Speaker 1: so the dynamic pricing is not just in the in
Speaker 1: the QSR space on menus. There's also this idea that well,
Speaker 1: you know, if I go to a restaurant on Monday,
Speaker 1: should that be exactly the same price the entire experience
Speaker 1: as it does on a Friday Friday? Are you hard
Speaker 1: to get a reservation Monday? Not as hard? You know? So,
Speaker 1: I think we're going to see a lot more of
Speaker 1: that kind of technology and experience coming into restaurants, and
Speaker 1: I think the customers will embrace it because they already
Speaker 1: have in so many other areas. Yeah, Jimmy, who's doing
Speaker 1: a good job leveraging AI or machine learning tech? Yeah?
Speaker 1: I think. Oh way, Shagi covered a lot of there.
Speaker 1: I tell you, jim companies you already mentioned like fifty
Speaker 1: of them company, I mean when they involved it, I
Speaker 1: love it. I'll say the following to you to answer
Speaker 1: your question, mister Allen. Um Agot is a company um
Speaker 1: that we like a lot in the leveraging AI machine learning.
Speaker 1: A goot is a company that really is back of
Speaker 1: house and it's using cameras, UM and the AI to
Speaker 1: ensure that the orders that are leaving the kitchen are accurate,
Speaker 1: are complete, particularly in thinking around off premise, either delivery
Speaker 1: or takeaway UM. Joe Pesci famously made a comment about
Speaker 1: what they do to you at the drive through in
Speaker 1: one of those Weak and Weapon movies, about how you
Speaker 1: may not be treated as well because by the time
Speaker 1: you find out your order is wrong, your X miles
Speaker 1: down the road. And I will not repeat mister Peschi's line,
Speaker 1: but he's he's right, And what I would say the
Speaker 1: value but a goot, particularly particularly is for a restaurant
Speaker 1: to successfully or have a positive positive virgin on an
Speaker 1: off premise item, particularly delivery. They're playing with pennies and
Speaker 1: if you have to if you forget the soy sauce
Speaker 1: for the sushi, the catch up for the fries, or
Speaker 1: you forget the fries, or you forget one of the
Speaker 1: items and you get the phone call from that guest A,
Speaker 1: you get the black eye as the restaurant B you
Speaker 1: got to send out another person to deliver that extra
Speaker 1: item you've wiped out and you have a loss on
Speaker 1: that item. So the importance of using a company like
Speaker 1: in a good cameras AI to ensure that the orders
Speaker 1: are leaving the kitchen are accurate or their red flag
Speaker 1: if they're not complete. I think that's the type of
Speaker 1: thing that is going to really help operators. Is it's
Speaker 1: sexy or the guests really know what's going on the
Speaker 1: enter is they don't, but if their orders are not incomplete,
Speaker 1: they're going to be a happier guest, better for the restaurant.
Speaker 1: I like it. I think it's sexy personally so, but
Speaker 1: I'm a restaurant nerdbody. Nobody likes cameras more than you
Speaker 1: might have cameras and mirrors too. I guess cameras very six.
Speaker 1: All right, before this takes a turn and Chatsy's yes,
Speaker 1: I think came all right, chats Esg's a hot button
Speaker 1: issue right now for a lot of reasons, but a
Speaker 1: big one is is it's really hard to measure environmental
Speaker 1: impact for a lot of different you know, just in general,
Speaker 1: it's just hard to measure the environmental impact of using
Speaker 1: different solutions, right So branded, however, the smart guys that
Speaker 1: that you are have made at least two investments that
Speaker 1: I know in companies that are making a meaningful and
Speaker 1: measurable impact on the environment. So what are these companies
Speaker 1: don't Yeah, no, it's a great question. I think we
Speaker 1: look at things, um, like, we have a vertical sustainability,
Speaker 1: which is our environmental play. Um. So we look at that,
Speaker 1: and I think in restaurants, with all the takeout and
Speaker 1: all the delivery, that has an environmental impact for sure,
Speaker 1: because a lot of waste produced. Um you know. So
Speaker 1: there's a lot of companies out there that are trying
Speaker 1: to solve for that. There are some companies are solving
Speaker 1: by simply making the delivery containers biodegradable and using all
Speaker 1: different you know, they're using coconut husks and and and
Speaker 1: and and left over whatever to make things biodegradable. That's great.
Speaker 1: There's also companies that are trying to look at you know,
Speaker 1: reusable things. Um so. So Dispatch Goods is a company
Speaker 1: we invest in that's looking at it from a reusable standpoint. Um.
Speaker 1: I think people are funny. Um they don't recognize that
Speaker 1: when you go into a restaurant, they glass and the
Speaker 1: silverware and the fork that you're using, Um, that was
Speaker 1: reused by the way. Someone else ate on that. And
Speaker 1: we watched it and you're now using it, So it's
Speaker 1: being reused. Yeah. And then and then people like when
Speaker 1: you go to a hotel, that towel and the sheets,
Speaker 1: by the way, that's being reused. Someone else used it. Yeah,
Speaker 1: so people are like, reuse that. I got to reuse
Speaker 1: something at someone else used? Like you're doing it all
Speaker 1: the time. What's the problem, you know? So it's just
Speaker 1: wrapping your head around reusing. It's hard. We're all doing
Speaker 1: it every day that we eat in a restaurant. You
Speaker 1: go to a hotel, you know that rent a car.
Speaker 1: Someone else sat in there. God knows what they were
Speaker 1: doing in that car, you know what I mean. So
Speaker 1: it's being so that's what And then and then another
Speaker 1: company again approaching it a little differently. Is just the
Speaker 1: overproduction of food. You know, you go into a lot
Speaker 1: of these convenience stores, et cetera. The the the grabbing goes.
Speaker 1: They're making a lot of sandwich is a lot of salads,
Speaker 1: and a lot of that's based on on you know, uh,
Speaker 1: last week, last year, numbers all different, all different kinds
Speaker 1: of algorithms and things like that, about how many sandwiches
Speaker 1: I've produced today, how many turkey, how many ham, you know,
Speaker 1: and it's it's all you know. Some of it's guessworks,
Speaker 1: some of it's based on numbers, this, that and the
Speaker 1: other thing. So Cope is a company that's looking at
Speaker 1: that as um, well, if you did make too much
Speaker 1: and and look, restaurants don't want to produce too much.
Speaker 1: You want to produce just the right amount. But at
Speaker 1: the end of the day, you might produce too much.
Speaker 1: And if you produced too much. Copy is making it
Speaker 1: really easy for that restaurant to donate that to a
Speaker 1: food bank, which is good for everybody. Checking a lot
Speaker 1: of boxes. They're getting credit for it with the whole
Speaker 1: different tax incentives through local and federal and state levels
Speaker 1: of government, which is great for everybody. Then they're also
Speaker 1: having a really great tracking system of what they're producing
Speaker 1: too much of when they're producing too much, to try
Speaker 1: and not produce too much because I mean their goal,
Speaker 1: I mean, everybody wants to give to charity. That's a
Speaker 1: great thing. But the idea is not making sandwiches every
Speaker 1: day so I can then just give it the charity.
Speaker 1: I mean, they can find other ways of doing that
Speaker 1: that are probably less expensive, like just writing a check
Speaker 1: to that charity. So copy is doing really great things.
Speaker 1: They're signing great contracts with a lot of really big
Speaker 1: national restaurant groups, national chains, and it's really an interesting way.
Speaker 1: And so we fell in love with this company because
Speaker 1: it was just so interesting that a lot of restaurants,
Speaker 1: you know, they make too much food. They know what
Speaker 1: to do it, they're giving it to food banks, but
Speaker 1: they're getting any cred it for it. So this is
Speaker 1: now tracking it getting credit for it, so they're saving money,
Speaker 1: they're still doing great things for the community. So really
Speaker 1: excited about what they're doing. So I think sustainability is
Speaker 1: top of mind for us. We're always looking for solutions
Speaker 1: to help. But I think it's got to be really frictionless.
Speaker 1: If you make it really complicated, really difficult for the
Speaker 1: consumer and for the operator, then they just prefer not
Speaker 1: to you know. So I think those are companies that
Speaker 1: are making it really easy. I just want to add
Speaker 1: to that the esc components. It's a hot topic. You're right,
Speaker 1: it's awesome, and I think generally this industry wants to
Speaker 1: do the right thing, want to do nice, good things.
Speaker 1: To your point, it's got to have a positive return
Speaker 1: on the investment. It has to be contributing to the business,
Speaker 1: and the business has to have a compelling return on
Speaker 1: that investment. Otherwise the operator is not going to you know,
Speaker 1: basically utilize emerging in denovo company that's doing really nice things,
Speaker 1: but it's not affording them a contribution to their own
Speaker 1: business model and their own again return of the investment,
Speaker 1: multipot invested capital, etc. So it's got to be contributing
Speaker 1: to the root value of that business. That's who we
Speaker 1: think Cope and Dispatch are doing for. Yeah, that's awesome.
Speaker 1: Um I'd like to shift gears to a topic that's
Speaker 1: very close to my heart. That's booze. Uh shats you
Speaker 1: have any other investments and that what's that? Yeah, I
Speaker 1: know that's close to Uh, that's close to Jimmy and
Speaker 1: might as well. That's how I met you guys right
Speaker 1: over beers that I see are Um So shats you
Speaker 1: have any other investments? In alcohol space? That's been a
Speaker 1: challenging space for us for a meread of reasons. It's uh,
Speaker 1: it's it's something we always look at. We gotta we
Speaker 1: have a very robust pipeline into the non alcoholic space
Speaker 1: and the alcoholic space. I just say the beverage space.
Speaker 1: We always have a robust pipeline. We look at it
Speaker 1: a lot. Um. I think that the bottom line is
Speaker 1: we don't have anything in that space at the particular moment. However,
Speaker 1: we look at it a lot. And I think, um
Speaker 1: become because of a restaurant guy. So I see all
Speaker 1: these brands all the time. I gotta be honest with you,
Speaker 1: I'm always scratching my head as to why a brand
Speaker 1: does really well. And I don't know if anyone really
Speaker 1: knows why. I mean, there was a time where, um,
Speaker 1: you know, um, I think was Sammy Hagar was the
Speaker 1: first real famous person to come out with I think
Speaker 1: it was Kabba Wabo, you know, and and and that
Speaker 1: was a success. And but that was very early. There
Speaker 1: weren't a lot of celebrities doing that. And then I think, um,
Speaker 1: George Clooney and and and Randy Gerber did Casa Amigos
Speaker 1: and that was like a monster success, like a billion
Speaker 1: dollars sale. And I think then a lot of celebrities
Speaker 1: jumped in, and I think everyone's like, well, the celebrities
Speaker 1: attach it, It's gonna be good. And and I think
Speaker 1: we've learned that's not necessarily the case, it doesn't. You know,
Speaker 1: celebrity attachment doesn't mean it's good. Um, a lot of
Speaker 1: rappers and artists have gotten into it and it hasn't
Speaker 1: been successful. So I think it's just for us, it's
Speaker 1: not We're more focused on I think technology, and we're
Speaker 1: focused on like how to you know, operators and and
Speaker 1: solutions to help them grow their sales and reduce costs
Speaker 1: and things like that. So I think when I look
Speaker 1: at the beverage space, you know, I'm sure some people
Speaker 1: come along that really you know, checks the lock boxes
Speaker 1: for us, but we haven't found it yet and so
Speaker 1: we're still looking. But I think it's it's a very
Speaker 1: challenging space there. You know, you go to a seven
Speaker 1: eleven or a Delhi or whatever, and if you look
Speaker 1: at the beverage selection of ice teas or or or
Speaker 1: or or you know, energy drinks, I mean there's so many.
Speaker 1: And is it the packaging that attracts you? Is it
Speaker 1: the flavor that attracts you? Is it the endorsement? You know?
Speaker 1: I look at that Liquid Death it's water and a can,
Speaker 1: water and a can, and it just got bought I
Speaker 1: think in BEV bought it for a couple hundred million dollars.
Speaker 1: I think it's just water and a can. You know,
Speaker 1: so to answer question, yeah, it's just I mean, you know, so,
Speaker 1: it's just it's pol in spring in a can that
Speaker 1: says like what dead? That's all. It is almost as
Speaker 1: good as almost pizza, pizza the cup delicious exactly. You know.
Speaker 1: The only thing Mike I would add to that is
Speaker 1: as branded's thesis is to be an operator centric, investor
Speaker 1: and accelerator. I can tell you, on one hand, with
Speaker 1: all five fingers remaining, how many restaurants or food and
Speaker 1: beverage owner operators have said to a chatty, can you
Speaker 1: help me find a vodka, help me find a spirit,
Speaker 1: help me find a brown spirit, help me find a
Speaker 1: new fill in the blank. Um. Truthfully, it just doesn't happen. Um.
Speaker 1: What they do ask is for is how do I
Speaker 1: improve my margins on my off premise and my delivery?
Speaker 1: What do I do? How do I reduce my labor
Speaker 1: in the prices or middle voages up cashiers? Can I
Speaker 1: how can I adjust? You know, watch what shake Shack's
Speaker 1: doing leveraging kiosks and then having guest ambassadors help the guests.
Speaker 1: But there are there're not gonna be no cashiers at
Speaker 1: a shake shack. That's the type of work we like
Speaker 1: to do. And while I love the beverage base, particularly
Speaker 1: as a customer, the fact is none of our members
Speaker 1: of our network are saying that they can't operate effect
Speaker 1: effectively their businesses unless we would recommend a bourbon. Respectfully,
Speaker 1: they just don't need us for that. So we have
Speaker 1: to find our right place and right now. Just being
Speaker 1: a sponsor of a beverage I don't think we can
Speaker 1: add the type of value in that domain that we
Speaker 1: can in tech and innovation. Yeah. So, uh, it's a
Speaker 1: crowded space. So yeah, So it's more like investments like
Speaker 1: poor my Beer and things like that. But we do
Speaker 1: drink a lot, Yes, so we do support industry. I've
Speaker 1: been I've been told we might be over supporting. I've
Speaker 1: been told we might be. We don't under cane, we
Speaker 1: don't undersupport. Yes, yeah, we have, we have. We We
Speaker 1: we have a lot of fun. I will say that
Speaker 1: we make a bunch of barrels every year, a few
Speaker 1: barrels that Jimmy and I help help you know, curate
Speaker 1: and and and taste and create and and we have
Speaker 1: a lot of fun making barrels and sharing that with
Speaker 1: our friends. So so I think that's probably our biggest
Speaker 1: investment in that space. Very cool, Jimmy. Are any of
Speaker 1: your portfolio companies raising money right now? Who are they
Speaker 1: and what makes them interesting? Yeah? There are quite a few, actually,
Speaker 1: and I'll divide our portfolio really into a third or
Speaker 1: third or third that's not an exact number, but a
Speaker 1: third of the companies had you know, secured their financing,
Speaker 1: extended their runways, you know, two plus years before the
Speaker 1: correction and the pullback, and they are now a they're
Speaker 1: very well positioned, and they get to zero and and
Speaker 1: focus on their business. The other two thirds, there's a
Speaker 1: category that had maybe you know, eight to twelve months
Speaker 1: but maybe less than a year, and they had to
Speaker 1: figure out how they're going to attack the market, and
Speaker 1: they are. And then too, the companies that were absolutely
Speaker 1: raising and then the correction, the pullback really at the
Speaker 1: end of this past summer at twenty two and now
Speaker 1: into a tough late third and fourth quarter and a
Speaker 1: challenging first quarter. They're the ones that are a little
Speaker 1: more in a challenging position because the backdrop for risk aversion,
Speaker 1: or rather risk aversion is high. They need to raise money,
Speaker 1: so they're going to market. What I would say is
Speaker 1: the following. And I've been doing emerging markets and alternative
Speaker 1: asset classes for a long time. Unfortunately, the single best
Speaker 1: time to invest is when the fear factor is high.
Speaker 1: It's when the masses have pulled out. The multiples as
Speaker 1: we talked about, have come down, and this is the
Speaker 1: most attractive. The pendulum has completely shifted and the valuations
Speaker 1: are in my opinion, more attractive today than when we
Speaker 1: launch the business. The terms, the protective provisions, the respect
Speaker 1: for capital is absolutely more attractive today than it's been
Speaker 1: since we launch this business. So my comment to investors,
Speaker 1: it is understandable why you want to sit on the
Speaker 1: sidelines and wait. I will only tell you that what
Speaker 1: brand it's done, and I mean certainly have companies in
Speaker 1: the delivery space, in the guest feedback space, in the
Speaker 1: loyalty space. I don't want to do anything that's gonna
Speaker 1: hurt my fineral licenses or Bloomberg Channel. I will mention
Speaker 1: companies that were very excited by such as Incentivio, multi
Speaker 1: multi faceted bundled solution in the delivery space and loyalty
Speaker 1: and engagement, ovation in the feedback space zach O. It's
Speaker 1: a favorite son of the industry. Spendo Loyalty, pure loyalty,
Speaker 1: frictionless and a wonderful growing company in chats who and
Speaker 1: image in Copia our ESG sustainability. My overarching comment though,
Speaker 1: is less about individual companies and it is more about
Speaker 1: this is a great time to invest in this transforming industry.
Speaker 1: And what Brand is trying to do is create a
Speaker 1: dedicated focus and diversified way of approaching. It's that's a
Speaker 1: little commercial on us, but I sincerely believe the attractive
Speaker 1: is at this moment and the one of the reasons
Speaker 1: it's so high is because capitals on the sideline and
Speaker 1: I respect that. But for those whoe to dip their
Speaker 1: toes into water, call me Jimmy, give at your cell phone.
Speaker 1: Well well, well we'll get to that at the end.
Speaker 1: That's how we'll wrap this up. You can give out
Speaker 1: We'll give out Jimmy's cell phone. Yeah. But in the meantime,
Speaker 1: you know, I was told that you guys wanted to
Speaker 1: include a branded segment. I don't know what you guys
Speaker 1: are doing today is a quick fire you are making.
Speaker 1: My understand that you were permitting us to do the
Speaker 1: branded Quickfire. Is this true? You were letting us do
Speaker 1: the branded Quickfire on Chopping it Up? Yes, sir, so
Speaker 1: chopping it Up Branded quick Fire Edition. Yep, this is
Speaker 1: this is the first time this has ever happened. This
Speaker 1: is unbelievable. Mike, I'm gonna ask you five lightning round
Speaker 1: questions on your Chopping It Up show. We're doing the
Speaker 1: Bran quick Fire. Are you ready? Mike? Yeah, I'm excited. Man,
Speaker 1: snow or sun Son. Where are you eating dinner tonight?
Speaker 1: Oh that's a good question. Um, Honestly, there's a fantastic
Speaker 1: Chinese spot. I think I'm I think I'm ordering in tonight,
Speaker 1: ordering using digital ordering platform ts Mom give a shout
Speaker 1: out ts Mom Montclair, New Jersey to do There we Go,
Speaker 1: There we Go spawns. This segment is sponsored by what
Speaker 1: is your favorite place to travel? Oh? Man? Uh, I
Speaker 1: just got back from Park City, Utah. Man, and it's gorgeous.
Speaker 1: You know we were we were snowboarding. I was snowboarding
Speaker 1: with my son, uh for a long weekend. It was
Speaker 1: it was spectacular. I don't know if that's my all
Speaker 1: time favorite, but but it's your favorite right now? It's Yeah,
Speaker 1: I've been there. What's your favorite food city in the world.
Speaker 1: I mean it's got to be New York, right, I
Speaker 1: think so you were thinking Modfield, New Jersey. But I mean, okay,
Speaker 1: if you were a channel Jimmy Ryan to a game
Speaker 1: of pin pin the tail on the donkey, who would
Speaker 1: you have better odds of beating Jimmy? I think I
Speaker 1: would go with Jimmy. Yeah, because you got a bum
Speaker 1: leg Jimmy. So, I don't know what the effect of affecting.
Speaker 1: I don't know what it is. But there we go.
Speaker 1: Here we go. The Brandon quick Fire chopping it up
Speaker 1: a dish with Mike Halan. That was great. Thank you
Speaker 1: Michael letting us do that. Yeah, that's awesome and I'm
Speaker 1: glad to I'm happy to do it. It was fun,
Speaker 1: all right. So where can our listeners, you know, thanks
Speaker 1: again for doing this. You guys are fantastic. I'm big
Speaker 1: fans of your your podcast Hospitality hang Out. You can
Speaker 1: find it anywhere you listen to your podcasts. Where else
Speaker 1: can our listeners go to find more information out about Brandon? Yeah,
Speaker 1: it's quicking to find us. I think you go to
Speaker 1: Brandon Strategic dot com. AM I right, Jimmy, Brandon state
Speaker 1: dot com is a great place to navigate all things
Speaker 1: you know. I agree. I'd also throw a shout out
Speaker 1: to Boom dot store, our marketplace for the industry, buy
Speaker 1: the industry, Boom Boom dot store. I got to tell
Speaker 1: you all your needs, all your wants right there for
Speaker 1: the industry, always, always free for operators to use. Great
Speaker 1: place to find technology for the hospital and food service space.
Speaker 1: And sign up for the newsletter. Sign up for the
Speaker 1: Brandon newsletter. It's fantastic. Branded Weekend Update. Oh yeah, I
Speaker 1: forgot that one. Yeah, I go to the what is
Speaker 1: that the weekend Update dot news weekend News. Check it out.
Speaker 1: Thanks thanks for letting us plug everything. This is awesome.
Speaker 1: You got it man, Thanks for doing this. I'm glad
Speaker 1: we finally got the bi and branded uh uh you know,
Speaker 1: co branded event podcast whatever it is together finally on
Speaker 1: the bucks Man. It's great. Mike. We appreciate you. I
Speaker 1: appreciate it. Thanks so much. And to Brandon, thank you.
Speaker 1: My brand